U.S. livestock: CME live cattle climb as funds roll

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange (CME) live cattle futures gained for a second consecutive session on Thursday, supported by technical buying and the roll by funds out of August into deferred months, traders said.

Thursday was the last of five days that funds in CME’s livestock markets that track the Standard + Poor’s Goldman Sachs Commodity Index periodically sold, or “rolled,” August long positions mainly into October.

August live cattle ended 1.275 cents/lb. higher at 112.725 cents, and above the 20-day moving average of 112.17 cents (all figures US$). October closed 1.725 cents higher at 112.075 cents and above the 10-day moving average of 112.02 cents.

Futures’ discounts to expected cash prices by Friday furthered market advances.

Market-ready, or cash, cattle bids in Texas were at $117/cwt and $116 elsewhere in the U.S. Plains versus $120-$122 asking prices, said feedlot sources. Last week, cash cattle in the Plains brought $119-$120.

“I was kind of surprised that futures had this much of a rally given what’s ahead of them,” said Wagnon Commodities owner Lynn Wagnon.

Processors might pay less for cattle based on their dwindling margins, more animals for sale than last week and seasonally lacklustre wholesale beef demand, traders and analysts said.

The morning’s choice beef price was up 27 cents/cwt to $205.46 from Wednesday. Select cuts slumped $1.55, to $193.96, the U.S. Department of Agriculture said.

CME live cattle futures buying and late-session corn price weakness boosted the exchange’s feeder cattle contracts. August feeders closed 2.425 cent/lb. higher at 141.7 cents.

Mostly weak hog futures close

CME July lean hogs, which will expire on Friday, was supported by its discount to the exchange’s hog index for July 12 at 81.37 cents, said traders.

Thursday morning’s lower cash and wholesale pork prices pressured other lean hog contracts.

July hogs closed up 0.125 cent/lb. to 80.3 cents. Most actively traded August finished 0.6 cent lower at 78.6 cents, and October down 0.15 cent to 67.4 cents.

Midwest cash hog prices on Thursday morning were mostly steady to $1/cwt lower on sufficient inventories, said regional hog dealers.

Thursday morning’s wholesale pork price fell $2.34/cwt from Wednesday to $88.51/cwt, after rib prices dropped more than $6, said USDA.

Retailers bought enough pork to avoid potential shortages in case hot weather in the Midwest delays hog deliveries to packers, said traders.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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